Analysis - CYT - Cytopia

Price($) 0.46
NTA ($) 0.32
P/NTA 1.42
Team 5.5
BurnPeriod 6.86
ProductPipe 4.8
ForeignMarket 2.8
Cash:Debt DebtFree


Cytopia is a drug discovering company with a focus on oncology. Its products are based on developing protein based inhibitors, and had acquired over 10 patents. CYT’s computer based screening allow protein and other structures to be identified quickly whether or not further developments are required.

CYT has the following class of products: CYT997, JAK3, JAK2, FMS. Within these classes of products, there is more than one product. Many of these products are at the very early stages of the preclinical phase, with the exception of CYT997 which has two products about to enter Ph II. The product score of 4.8 is a good figure. Though many of the potential products are before preclinical, the breadth of the pipeline is important in diversifying the risks and is reflected in the score.

The fundamental figures collectively look good. Like many other biotechs, CYT is debt free. But unlike other biotechs, its cash position is good enough for CYT not to be required to report quarterly. From the half year reports, extrapolation of cash burn rate indicates CYT will last more than 1.5 years, in which time CYT anticipates to have several products in Phase II trials. Another major buy prompt is its Price to NTA of about 1.4 – we consider a ratio of up to 3.0 to be a reasonable buy.

Its team score of 5.5 is considered very good. At least 4 members of the management team are scientists, including the discoverer of JAK1 and JAK2 enzymes, Dr Andrew Wilks. The founder of CYT, Dr Kevin Healy is still a member of the directors.

The foreign market score is only 2.8 and is regarded as low. This is not surprising since none of CYT’s products are in market. However, even at the early stage, it can score 2.8 because CYT successfully engaged other pharmaceuticals for collaboration in their research. CYT’s R&D collaboration with Novartis on JAK3 is one of the biggest for an Australian biotech company. Being able to collaborate and receive payments from big pharma at such early stages appear to be the model for CYT and is commendable.

Thing to watch for is the conclusion of Ph 1 of CYT 997 trial (oral) 4th quarter this year.

In terms of technical analysis (for the immediate short term as of 26 Oct 07), the 5 day momentum is heading upwards from a negative position and is on the verge of positive. The general trend from end of July (about 70c) is downward, and for those waiting for an upswing, it may be best to wait for the upswing signal.

Recommendation: Buy up to 55c

Company Brief - ANX - Anadis

Price (18/10/07): $0.10
Shares (25/09/07): 103,668,014

Anadis is a unique biotech in two ways. Firstly, for a very small biotech company (Market Cap $10m), it has a product on the shelf already. Secondly, its technology platform based on polyclonal antibodies allow its product to be clasifeed as food rather than drug (according to companies. This implies that the clinical development, manufacture and trials of the products are faster and cheaper.

The product pipeline seem to be too broad and most are at the pre-clinical stage. The products target range from influenze, oncology to anti-bioterrorism. Diversification in potential products in general is a good thing but the broadness of this raises concern about ability to focus.

Briefly looking at the cash position, at the end of the last financial year, its cash remaining ($672k) is only one-fifth the cash required for operations of the last year ($3m). If the trend continues, ANX would be penniless before Dec07. Since mid 2007, it had negotiated a $5m line of credit, and raised another $700,000.

The poor cash position alone is enough for a "Don't Buy" recommendation, without needing further analysis. The thing to watch for would be how much of the $5m credit will be used and how much shares will be issued.

Recommendation: Don't Buy